Paper finds little evidence of long-term scarring

Federal Reserve Bank of Richmond

A new study published by the Richmond Fed finds that short-term economic contractions do not usually cause long-term economic damage, or hysteresis.

In economic theory, “hysteresis is the idea that disturbances that are typically regarded as transitory”, like an interest rate hike, “can have very long-lived, or even permanent effects on real variables, such as output or unemployment”. People made unemployed by a recession may, for example, permanently leave the labour market, or fail to keep

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here:

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: